Under the current tax law, an asset that is classified as 5-year property and has a cost of $200,000 would result in a depreciation deduction in Year 2 of

Question

Quizplus · Accepted Answer

The current tax law allows for 20% depreciation deduction in Year 1 (although it can be adjusted based on the month the asset was placed in service) for 5-year property, and then 32% for the remaining cost in Year 2. Therefore, the Year 1 depreciation deduction would be $40,000 (20% of $200,000), leaving $160,000 as the remaining cost. In Year 2, the depreciation deduction would be $51,200 (32% of $160,000), resulting in a total depreciation deduction of $91,200 ($40,000 + $51,200) over the first two years.

Under the Current Tax Law, an Asset That Is Classified